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A List of Points about Bitcoin mining missed when comparing Bitcoin vs VISA
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Not necessarily complete, but this is my list. The argument against mining is two fold. 1) Mining is wasteful, and 2) there are better ways to secure crypto.
To disparage Bitcoin, Bitcoin is often compared to VISA. Hence the following list of observations and facts:
- Mining done today on Bitcoin continues to secure the blockchain forevermore. It is an investment in security that continues to secure the blockchain record.
- Bitcoin's mining has created the most hardened data structure in existence.
- Bitcoin is the sole issuer of Bitcoin tokens.
- Bitcoin provides security for accounts that hold bitcoin on chain
- Bitcoin provides all if its security for any cryptographic structure (files, Merkle Trees, protocols) that anchors into Bitcoin
- Bitcoin Mining can be optimized for lowering carbon output by following market incentives
- Waste energy is cheaper than wholesale energy (gas flares, excess wind/solar, geothermal, etc.)
- Mining is trivial to locate at source (eliminating transmission loss)
- Bitcoin can support transactions on chain between the accounts it creates and secures
- The Bitcoin blockchain is a settlement layer for all sorts of Bitcoin transactions off chain, which arguably are more carbon efficient than VISA
- Bitcoin supports lightning transactions
- Lightning is peer to peer
- Lightning only requires the exchange of transactions peer to peer (a bit more complicated when routing through channels though)
- Lightning has no need for vast server farms to support it.
- Lightning likely is very light weight compared to VISA (though we have no numbers for Lightning that I know of)
- Bitcoin supports custodial transactions between parties (equivalent to what VISA provides for banks).
- PayPal, Coinbase, Cash App, etc. all provide Bitcoin transactions with no more carbon footprint than VISA
- VISA is not a settlement layer for dollars and does not ever serve that role.
- Banking (from Central Banks to Credit unions), FedWire, Swift, ATMs, Cash systems (including armored trucks to move around paper and coins) collectively match the functions Bitcoin provides.
- We have very few numbers for the Carbon produced by banks.
- The ratio of the budget for mining vs the Value/Transactions of Bitcoin Network approaches zero over time due to Bitcoin halving.
- In the future fees can continue to support mining for Bitcoin.
- Bitcoin may become fee supported either by increasing fees or by increasing blocksize
- Very high fees will still be affordable for settling accounts between 2nd layer solutions
- Technology may advance to the point Bitcoin Developers may except larger blocks
- Vested interests (governments that use Bitcoin as legal tender and Corporations that use Bitcoin for payments, for example) may choose to provide support for mining
- The Value of Bitcoin has been growing faster than the halving of the rewards for mining have been declining
- The carbon footprint for a dollar's value in Bitcoin exchanged by two parties by any means has absolutely gone down year over year by developing payment rails.
- The carbon footprint for a dollar's value in Bitcoin exchanged by two parties by any means has absolutely halved every four years by the halving of rewards in Bitcoin to miners.
- We don't have any reasonable estimates for the average cost in carbon of a consumer's Bitcoin transaction that includes all the transactions typical between two bitcoin users of any type.
- We don't have any reasonable estimates for the average cost in carbon of a consumer's dollar transaction that includes all the transactions typical between two dollar users of any type.
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- 2 years ago
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